Burkholder Wealth Management

Investors often become most interested in the areas of the market that have performed well recently.

Following the "lost decade" for U.S. stocks in the 2000s, international investing was a popular topic. Then, after a decade of strong U.S. market performance from 2011–2020, interest in international stocks faded for many investors.

But recent results offer an interesting reminder.

Over the past five years, non-U.S. developed market value stocks quietly led among major equity asset classes, outperforming what many investors may have expected.

The challenge is that market leadership is difficult to predict. The investments that performed best in the past aren't always the ones that will lead in the future.

That's one reason diversification remains such an important part of a long-term investment strategy. Rather than trying to predict which market will outperform next, investors can benefit from maintaining exposure to a broad range of opportunities around the world.

Index funds have become one of the most popular investment vehicles thanks to their low costs, transparency, and broad market exposure. But there may be costs that investors don't immediately see.

This week's video, "The Real Cost of Stock Index Rebalancing" explores the impact of index rebalancing—the process of adding and removing stocks from an index. Because these changes are predictable, large volumes of trading can occur at specific times, potentially creating hidden costs that aren't reflected in a fund's expense ratio.

The discussion also highlights how index construction methods can sometimes lead to style drift and other inefficiencies that may affect how accurately a portfolio captures its intended market exposure.

Watch the full video through the link in our bio or visit:
https://conta.cc/4dXy24g

Investors may feel tempted to move away from equities when recession fears rise, but history tells a different story.

Markets are forward looking, meaning stock prices often adjust before a recession officially begins. While volatility can be uncomfortable in the short term, long term investors have historically been rewarded for staying disciplined.

Looking back at the past 16 US recessions:
• In 12 of them, stock returns were positive two years after the recession began
• The average annualized return over those two years was 8.8%
• A $10,000 investment at the start of a recession grew to an average of $12,153 after two years

Periods of uncertainty are never easy, but maintaining a long term investment strategy and avoiding emotional decisions can make a meaningful difference over time.

Markets can shift quickly and this is a great reminder why discipline matters.

From March 2020 through September 2020, large growth stocks outperformed small value by a wide margin as uncertainty drove investors toward big tech and stability.

Then the script flipped.

From October 2020 through March 2021, small value stocks surged ahead with a 63% cumulative outperformance.

The takeaway is simple: leadership rotates. What lags today can lead tomorrow.

Trying to time these swings is nearly impossible. Staying invested and sticking to a long term plan is how investors capture these powerful rebounds.

Consistency beats prediction.